Working paper 44-A Farm Gate-to-Consumer Value Chain Analysis of Kenya’s Maize Marketing System

Author(s):  Lilian Kirimi, Nicholas Sitko, T.S. Jayne, Francis Karin, Milu Muyanga, Megan Sheahan, James Flock, and Gilbert Bor

Introduction:

Maize is the most important staple food in Kenyans' diets, providing roughly a third of the caloric intake for Kenya's population. Maize is also the central crop in Kenyan agriculture, being grown by 98% of Kenya's 3.5 million smallholder farmers. Maize marketing and trade policy in Kenya has been dominated by two major challenges.

The first challenge concerns the classic food price dilemma: how to keep farm prices high enough to provide production incentives for farmers while at the same time keeping them low enough to ensure poor consumers' access to food. The second major challenge has been how to effectively deal with food price instability, which is frequently identified as a major impediment to smallholder productivity growth and food security.

In attempting to cope with these interrelated challenges, policymakers have grappled with issues of the appropriate role of the state in marketing and pricing, and the extent to which variable import tariffs and trade controls can promote the achievement of national policy objectives. A third and as yet inadequately appreciated maize policy challenge, one that is facing the agricultural sector more generally, is the growing problem of access to land and the shrinking size of smallholder farms.

Partly as a result of declining landholding sizes in Kenya, most rural farm households have become net buyers of  maize. The potential for transforming smallholder farmers from maize buyers into surplus producers is  becoming increasingly difficult as population growth and land pressures continue unabated. Over half of the smallholder farms in Kenya are less than 1.5 hectares.

In this context, a major, yet underappreciated, agricultural policy issue is how to achieve broad-based smallholder-led agricultural growth under conditions of  increasingly acute land pressures. Identifying the appropriate role and potential of maize intensification in  densely populated rural areas is needed to address this important policy question. Developing appropriate maize marketing and trade policies in the context of a growing structural deficit in  maize and ever shrinking smallholder farm sizes requires a detailed understanding of the structure and  performance of Kenya's maize value chain. Understanding how the value chain has developed in turn requires an understanding of the market liberalization process in Kenya, as this has been the major policy thrust affecting the industry over the past 20 years.

This study is a follow-up to the Tegemeo study of Kenya's maize value chain carried out in the late 1990s by Nyoro, Kiiru, and Jayne (1999). This study, conducted in 2009, describes the operation of Kenya's maize value chain two decades after the liberalization process began. A broader objective of the study is to provide a full picture of Kenya's maize value chain from the farmgate to the retailing of maize meal to consumers; to assess the competitiveness of maize marketsin Kenya; to identify major trends in maize prices, maize meal prices, and marketing marginscharged at various stages of the system; and to identify actions by the public sector to overcomeproduction and marketing problems and support the Kenyan government's national policyobjectives of food security and smallholder-led development.

A farm gate-to-consumer value chain analysis of Kenya's maize marketing system